Chinadotcom slumps on Q4 results

VivianChu

HONG KONG (CBS.MW) - Shares of pan-Asian Internet company Chinadotcom took an 11-percent dive on Wednesday after posting a worse-than-expected drop in fourth-quarter revenues.

Chinadotcom
CHINA, +0.00%
shares ended at $3.03 -- 96 percent lower than their year-high of $78 in March 2000.

For the quarter ended December 31, 2000, its fourth-quarter loss widened to $133.2 million, or 1.30 a share, from $13 million, or 15 cents per share, in the year-ago period. Fourth-quarter revenues tripled to $34.4 million from $10.9 million in the year-ago period, but fell from $36.5 million in the third quarter.

Analysts polled by Reuters in Hong Kong expected revenues to be between $36.7 million and $40.2 million.

The fourth-quarter results included a charge of $109 million from goodwill amortization and the write-down of the value of its investments. The company said last month it expected the write-downs to total at least $70 million.

Chinadotcom warned that revenues in the current quarter would drop 25 percent from the fourth quarter of 2000. Like most Internet portal operators, its business has taken a hit on reduced corporate spending and advertising spending.

"Given the uncertainty in IT spending, shortage of capital and the slowdown of the global economy, we see the operating environment continuing to be extremely challenging and difficult," CEO Peter Yip said in a statement.

First-quarter revenue will be reduced by $4 million to $5 million due to a change in the structure of its venture with AOL Time Warner's
AOL
Hong Kong service, Chief Financial Officer Daniel Widdicombe told analysts in a conference call.

Beginning this year, Chinadotcom began directly funding AOL's Hong Kong service, whereas before AOL was a customer of Chinadotcom. Under the new structure, Chinadotcom will no longer receive revenues from AOL. The two parties are in talks over the exact structure of the venture.

The gloomy results were worse than some analysts predicted. "Earnings were pretty dismal, as is the outlook for next quarter," said Antonio Tambunan, vice president of Regional Internet at Deutsche Bank in Hong Kong.

"We all expected the write-offs to be larger than $70 million, but $109 million is pretty large," he added.

As the first China-focused Internet company to list on the Nasdaq, Chinadotcom raised $500 million in July 1999, making it the richest Internet company in non-Japan Asia.

Its cash holdings fell to $443 million in the fourth quarter, from $485 million in the previous quarter.

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